With the advent of employee directed contribution plans such as 401(k) programs during the 1980's, many investors have ultimately become responsible for managing their own retirement investments. However, most individuals do not have the proper financial understanding to make well-informed investment decisions. Technical analysis of investments involves a thorough understanding of probability, statistics and risk assessment techniques. Furthermore, the types of retirement accounts (401(k), IRA, Roth IRA, etc.) and the possible investment options are continuously increasing in number, diversity and complexity. For example, while many investors today are very familiar with the concept of investing in a mutual fund as an ostensibly simple way to invest, there are now over 10,000 mutual funds to choose from.
Personal retirement assets currently exceed $4.5 trillion and are expected to reach nearly $9 trillion by 2004. Therefore, seeking to capitalize on the apparently vast market opportunity, many financial and software companies have developed investment software to assist individuals in evaluating their assets and in planning for retirement. Most investment software packages and applications found on the Internet provide the investor with asset allocation suggestions. The investor then determines the actual combination of financial products that satisfy the suggested allocation. Additionally, some programs employ “retirement calculators” to determine the probability of achieving a retirement income goal based on an anticipated retirement age, a savings amount, a desirable investment risk, and an asset allocation. In determining the probability of achieving a retirement income goal, these prior art retirement calculators essentially forecast the investors accumulated wealth as of the date at retirement. Thereafter, the calculators convert this lump sum amount to a fixed annuity which is purchased at the time of retirement.
Furthermore, some investment programs then create an optimized portfolio, comprised of the available financial products, that satisfies the investor's retirement goals and investment style. In analyzing the investor's goals and current investments, the prior art systems define a retirement investment strategy, determine a target asset mix, and identify a model portfolio for the user to implement.
Since most retirement assets are invested in mutual funds and since a vast amount of individuals prefer investing in mutual funds, a number of mutual funds selector programs are available in the prior art. Such mutual fund selection tools available in the prior art are designed to assist individuals in selecting mutual funds that meet certain criteria, such as, investment type, fund performance, fund ratings, fund risk, and fund loads. Typical mutual fund selectors allow individuals to eliminate mutual funds which do not meet a certain stated criteria. Specifically, based on the investor's understanding of the various statistical criteria, the investor sets thresholds, and the system filters the available universe of mutual funds eliminating those funds which do not meet the specified criteria. Once the universe of available funds is adequately reduced, the investor sorts the remaining funds one criteria at a time, and makes a subjective evaluation of the funds which meet all of the defined criteria.